In September 2012 the South China Morning Post ran an article claiming personal finance consultants had been approached by fraudulent companies running carbon credit scams, trying to sell ‘bogus' Carbon Credits to consumers in Hong Kong.
And these accounts of ‘rogue' Carbon Credit traders means investors should only deal with reputable brokerages dealing in verified products, says Franklin Connellan, head of investments atsustainable investment group AGT.
'The easiest way is to carry out some research and ensure the broker and brokerage deals only in Carbon Credits that are backed by governing bodies such as the Verified Carbon Standard or Gold Standard Foundation.'
The VCS was founded in 2005 by business and environmental leaders who identified a need for greater quality assurance in voluntary markets. Its founding partners - the Climate Group, theInternational Emissions Trading Association (IETA) and the World Economic Forum - convened a team of global carbon market experts to draft the first VCS requirements and the World Business Council for Sustainable Development (WBCSD) joined the effort soon after.
Similarly, the Gold Standard Foundation consists of, and is supported by, a Secretariat of 30 people based in ten different countries, a Foundation Board, a Technical Advisory Committee (TAC), more than 80 NGO supporters, a roster of industry experts, UN accredited auditors and registry platforms such as APX and Markit.
Voluntary Emission Reductions (VERs) Carbon Credits enable businesses from all sectors to offset their carbon emissions and make a measurable contribution towards environmental projects. The list of entities that engage in voluntary carbon trading includes small businesses in the public and private sector, universities and other educational bodies, charities and also individuals. Thus, Carbon Credits are now of legitimate interest to every segment of society, on both a personal and organisational level.
Some joke it's like selling fresh air - and in ways it is - but this Carbon Credit certificate is a freely tradable commodity similar to any other, such as gold, oil or coffee beans. Once a Carbon Credit is verified it is valued at the market price, which moves up and down the same way as any other, depending upon the demand and supply conditions at the time.
Investors who have purchased AGT Carbon Credits over the past few years have certainly been smiling about their returns with holders of Carbon Credits in 2012 seeing their investment increase in value by 30.2 per cent in 2011 - And 2010's investors made over 22 per cent. With companies and governments continuing to turn to emissions trading as a tool for fighting climate change, demand continues to outstrip supply.
Some of the world's top organisations are getting involved. In early 2012 Microsoft announced its quest for carbon neutrality by making data centres, air travel and offices meet targets by making every unit of the company accountable for its use of energy and the amount of carbon it generates. One of the world's largest retailers, Marks and Spencer, has become carbon neutral and even the Canadian Olympic team offsets its emissions. In motorsport, Abu Dhabi Desert Challenge in March, 2012, led the way by signing a deal to offset any environmental damage from the 2012 event and the Lotus F1 Team is committed to carbon neutrality - all contributing to the increased profile and high demand for voluntarily buying and retiring Carbon Credits for the good of the planet, which in turn drives the market for verified Carbon Credits.
Mr Connellan from Advanced Global Trading AGT stresses - make sure you are dealing with reputable brokers and verified products, but ignore the high-performing commodity at you peril as you could be passing up a potentially lucrative addition to your investment portfolio.